Sam Bankman-Fried Barred From Encrypted Messaging Apps, Talking to FTX Employees
Sam Bankman-Fried has been temporarily barred from using encrypted messaging applications and contacting former and current FTX employee.
(Bloomberg) -- Sam Bankman-Fried was temporarily barred from using encrypted messaging applications like Signal and contacting former and current FTX employees.
Federal prosecutors in New York had asked a court to impose new bail conditions on the 30-year-old, who is facing fraud charges over the collapse of the cryptocurrency exchange, after he contacted a former colleague on Signal a few weeks ago. Bankman-Fried also sent a Jan. 2 email to John Ray, his successor as FTX chief executive officer, suggesting they meet in person.
US District Judge Lewis Kaplan on Wednesday agreed to hold a Feb. 7 hearing on the matter, but he imposed the government’s conditions in the meantime. Bankman-Fried, who pleaded not guilty on Jan. 3, is currently living at his parents’ house in Palo Alto, California, as part of a $250 million bail package.
Bankman-Fried’s lawyers are opposing the new bail conditions, saying their client’s Jan. 15 Signal message to FTX’s US general counsel was an “innocuous attempt” to offer assistance in the ongoing bankruptcy process. But the general counsel has also been identified as a witness in government court filings, and prosecutors argued Bankman-Fried could be trying to influence that person’s testimony.
Though the US general counsel was not identified in court papers, Ryne Miller has continued on in that position after FTX’s November bankruptcy filing.
“I would really love to reconnect and see if there’s a way for us to have a constructive relationship, use each other as resources when possible, or at least vet things with each other,” Bankman-Fried wrote in the Jan. 15 message.
In his message to Ray, who was appointed to manage FTX’s bankruptcy, Bankman-Fried wrote, “I know things haven’t gotten off on the right foot but I really do want to be helpful — whether on the funds or on anything else.” He suggested meeting up with the new CEO in New York “even if just to say hi.”
Prosecutors said in their filing last Friday seeking new bail conditions that their investigation revealed Bankman-Fried had a history of using the auto-delete function on Slack and Signal when he was at FTX, resulting in the loss of “incriminating conversations.”
Bankman-Fried’s lawyers said in a Saturday response that they were caught off guard by the filing, claiming they had already been discussing with prosecutors a mutually acceptable deal on new bail conditions.
“The Government apparently believes that a one-sided presentation – spun to put our client in the worst possible light – is the best way to get the outcome it seeks, even if it does not present the full context to the court,” Bankman-Fried lawyer Mark S. Cohen wrote.
Cohen proposed restricting Bankman-Fried from contacting a smaller number of associates, including former Alameda Research CEO Caroline Ellison and FTX co-founder Gary Wang, both of whom have pleaded guilty to fraud and are cooperating with prosecutors.
The case is US v. Bankman-Fried, 22-cr-673, US District Court, Southern District of New York (Manhattan).
(Updates with background on defense arguments.)
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